It was almost like winning a planetary lottery. When oil began flowing from state-owned lands in the 1970s, Alaskans found themselves in a tantalizing quandary: What to do with a windfall worth billions of dollars? After years of wrangling, they chose three uses: (1) let the state government use part of it for schools, highways, and other infrastructure; (2) return a big chunk to citizens directly through annual cash dividends; and (3) invest the remainder in a portfolio of stocks and bonds, so that dividends will continue after the oil runs out. The formula for paying dividends was an egalitarian "one citizen, one share." The entity created to handle the citizens' windfall was called the Alaska Permanent Fund. The father of the Permanent Fund was a crusty bush pilot turned politician named Jay Hammond. A fiscally prudent Republican, Hammond was elected governor in 1974 just as oil money began flooding state coffers. Hammond felt strongly that Alaska's oil wealth belonged to its...